Advisors and decision-makers in product eliminations

This article reports on the product elimination decision within selected sectors of the British engineering industry. The study identified and examined the key organizational participants in product elimination activities. The marketing function and a top management committee generally assumed a significant portion of the product elimination decision making. The results of the study suggested that the people responsible for product elimination varies considerably among companies, depending on such factors as size, product diversity, operations technology, and market competition.     

Applying financial portfolio and multiple criteria approaches to product line decisions

This article describes the application of decision rules from financial portfolio theory to the evaluation of product lines. The focus is on the risk/return implications of an “add” decision to the total portfolio versus the individual product. Multiple criteria approaches that aid product line evaluations are also presented.     

Criteria changes across product development stages

This paper analyzes the criteria used at making go/no-go decisions at major points in the product-development process, taking each phase separately. First, the variation in the sets (market, product, and financial) criteria used from one phase to another is studied. Second, the specific criteria deployed are analyzed. The results of the decision-systems interviews conducted show shifts in weights among the three sets of criteria as the development cycle progresses. In terms of criteria, the product-development process can be summarized using the following three questions in this specific order: 1) “Is there a market for the concept?” 2) Can the concept be transformed into a concrete product?” and 3) “Can the concrete product be manufactured and marketed profitably?” The analysis of specific criteria reveals that the use of some criteria is restricted to one particular phase, whereas some are used at every decision-making point. Also, the orientation of the company in question will cause variation among specific criteria use and weighting. Some factors, however, are quite universally applicable.     

The impact of technical consultants on the quality of their clients' products: Evidence from the Bordeaux wine industry

Research summary : Recent research rooted in the resource‐based view of the firm suggests that resources are more likely to create value if they are effectively managed. An underlying assumption of the literature is that firms manage their resources on their own. However, many firms hire consultants to help them do so. In this study, I develop and test hypotheses regarding the impact of technical consultants on the quality of their clients' products. Using data from the Bordeaux wine industry, I find evidence that the use of technical consultants has a positive impact on relative product quality and a negative impact on the extremeness of relative product quality. Moreover, the positive impact of technical consultants on relative product quality is stronger at lower levels of relative resource quality. Managerial summary : Findings from a study in the Bordeaux wine industry indicate that the decision to hire consultants should depend on a firm's strategy. If a firm wants to improve its performance, it should hire consultants. Indeed, the “best practices” of technical consultants are generally more valuable than internally generated knowledge. If a firm wants to achieve outstanding performance, hiring consultants may not be the right decision. Because the “best practices” of technical consultants have more certain performance implications than internally generated knowledge, they decrease the likelihood of extremely low performance. However, their lack of uniqueness also decreases the likelihood of extremely high performance. Finally, the decision to hire consultants should depend on the quality of a firm's resources. Firms with low‐quality resources tend to benefit more from the “best practices” of technical consultants. Copyright © 2016 John Wiley & Sons, Ltd.     

Industrial product elimination: Major factors to consider

This study investigates the evaluation and decision-making stage of the product elimination process. The study revealed the nature and intensity of the process through which “weak” products are evaluated and elimination/retention decisions are made.     

Clinging to Slim Chances: The Dynamics of Anticipating Regret When Developing New Products

This paper focuses on the effects of anticipated regret during large‐scale investment projects—namely new product development. Anticipated regret means worrying about the future, and decision‐makers experience it prior to both making a decision and knowing the outcome of that decision. It is forward‐looking while actual regret is backward‐looking. Decision‐makers must make project continuation/termination decisions with conflicting pressures. If they continue it, they might receive disconfirming information in the future and therefore regret their decision. If they stop it, they also might regret that decision later, too, if they subsequently conclude it was an error to do so. We term these conflicting pressures anticipated “keep” and “drop” regret, respectively. In the main study, nearly 300 individuals completed a decision‐making exercise in which a failing new product development project was evaluated, and various factors were measured, including both types of anticipated regret at multiple points in the project. The results show that decision‐makers anticipate regret when making project continuation decisions, and anticipated keep and drop regret exert pressures that differ in direction and magnitude. Most interestingly, anticipated drop regret does not diminish as the failing project progresses whereas anticipated keep regret increases as more negative information is received over the course of the project. A second, smaller study was conducted using a different population, and the results of the main study were replicated in this supplemental study, thereby adding confidence in these findings.     

Revitalizing weak industrial products

The study reported in this article focuses on the policies and practices of industrial goods companies to revitalize weak products. The decision was found to be a multiple-stage sequential process that begins with “diagnostic” routine to identify the causes of a product's unsatisfactory performance and ends with the implementation of a corrective action that management believes could restore the product's health.     

New Product Team Decision Making: Regulatory Focus Effects on Number,Type, and Timing Decisions*

Company executives rely on new product development teams to carry out their directives and make decisions according to management's goals. However, team members bring their own motivational perspectives to strategic decisions. This research examines how individual and leadership motivations influence a dyadic team's new product decisions. Specifically, this article investigates how matching vs. mismatched motivations between team members affect new product number, type, and timing decisions. In addition, this study asks how effective leadership‐provided motivations are in guiding teams' new product decisions. A set of hypotheses is developed using regulatory focus theory, which identifies basic motivational differences in individuals (i.e., promotion vs. prevention focus) and their effects on decision making. The hypotheses examine the effects of regulatory focus match vs. mismatch within teams on the likelihood to introduce new products, the timing of new product introductions, and the types of new products introduced. To test the hypotheses, a controlled, yet realistic product management simulation is employed. A total of 124 undergraduate seniors (83 women and 41 men) at a large public university enrolled in a marketing management capstone course participated in this study for partial course credit. Utilizing two‐person teams engaged in a business simulation ensured an appropriate level of controlled complexity in the decision making task, while allowing the phenomena of interest to be isolated and tested. Results show that when dyads share the same motivational approach (regulatory focus match), leadership‐prescribed goal pursuit strategies are largely ineffective. Only dyads that do not share the same motivational approach to decision making (regulatory focus mismatch) make new product decisions consistent with leadership‐prescribed goal pursuit strategies. For regulatory focus match dyads, the results demonstrate that a promotion focus (when compared to a prevention focus) leads to greater numbers of new products introduced, faster new product introductions, and more novel new product introductions. For new product managers, these results carry important implications. Which new product opportunities to invest in and which to forgo is presumably determined by the strategic direction given to teams by top management. Results suggest that when team members share the same motivational approach, this not only influences new product decisions, but also diminishes or eliminates the influence top management can exert on new product decisions. Such “isolation” from leadership influences does not have to be detrimental. For example, companies that seek to insulate new product development teams from influences from the top, such as is the case in many new venture incubations, would be well served to staff those teams ensuring a promotion focus match.     

Key managerial factors in new venture departments

Two clusters of factors —the “corporate strategic posture” and the New Venture Department (NVD) “political posture” — appear to determine the direction of an NVD's evolution. The “corporate strategic posture” refers to the cycles of diversification and consolidation that typically characterize corporate growth. A corporation's “strategic posture” at any given point in time can be positioned on a continuum, one end of which is a “diversifying” posture, while the other end is a “consolidating” posture.     

Perspective—Riding the Wind: Managing New Product Development in an Age of Change

New product development (NPD) has never been more challenging or rewarding than it is today. With the dawning of the new millennium, new product developers now find themselves in an “age of change,” the likes of which the world has never known. The rate of change is numbing, if not stupefying for many business people. With the winds of change blowing at near gale force intensity levels, this is clearly a time for NPD professionals to pursue new product and market strategies that are anchored on sound business fundamentals. This article begins with a brief review of the Product Development & Management Association's 1998 International Research Conference held in Atlanta. The theme for the conference was “Achieving Excellence in New Product Development and Management.” The article then offers a reflective look at seven NPD themes that could dominate new millennium business thinking and offer guidance to those seeking new product success. The article's first theme discusses why NPD is increasing in importance. The second theme outlines key NPD building blocks which NPD champions must bolster for new product success. The third theme explores the value in conceptualizing NPD output in items of “turns per decade.” The fourth theme champions the notion that continuous quality improvement is an integral part of NPD's contribution to a firm. The fifth theme explains why product elimination is an essential element in the innovation process. Theme number six reminds readers that fun and optimism are essential and commonly overlooked ingredients for sustaining NPD achievement. The seventh theme states that product development professionals build credibility and successful careers by delivering on promises made. Innovation opportunities embedded within each theme are explored from both firm‐level and individual developer‐level perspectives. In building the case for their themes, the authors initially provide a rationale for NPD's growing stature and importance. Then they suggest NPD strategies that firms can implement with high likelihood of success. The article concludes with suggested actions that individual developers can undertake to bolster their own careers while simultaneously strengthening the NPD profession.     

Passion for Work,Nonwork‐Related Excitement,and Innovation Managers’ Decision to Exploit New Product Opportunities

This article investigates the role of affect in innovation managers’ decision to exploit new product opportunities—a decision central to the innovation process. The model proposes that different types of passion can trigger managers’ exploitation decisions but that this effect is contingent on experiencing excitement from events outside their work environment. A field experiment with 90 owner–managers of young firms located in an innovation context (business incubators) shows that passion for work and nonwork‐related excitement levels interdependently impact innovation managers’ decision to exploit new product opportunities. Specifically, harmonious passion has a general positive effect on managers’ propensity to exploit. In contrast, the effect of obsessive passion is more complex and contingent on the additional excitement managers experience such that the positive relationship between obsessive passion and the decision to exploit is more positive with higher levels of excitement. These findings extend the product innovation management literature by acknowledging that decision‐makers’ affective experiences influence innovation decisions and provide a first step toward understanding the role of affect and passion in the product innovation context. Second, the finding that obsessive passion and nonwork‐related excitement interact in explaining opportunity exploitation decisions highlights the need to incorporate contingency relationships in models of innovation decision‐making. Third, in drawing on a field experiment and the experimental manipulation of managerial affect during the decision‐making task, this article answers a recent call in the project management literature to pursue less common methodological approaches and develop “broader theoretical schema” in order to enhance our understanding of innovation management. Finally, this study also has implications for practitioners because it can help innovation managers understand their own decision policies. To the extent that innovation managers are able to regulate their affective experiences, this improved understanding might prevent them from premature and faulty decision‐making.     

Product Development Time Performance: Investigating the Effect of Interactions between Drivers

Rapid and punctual new product development (NPD) has become a top priority in many organizations as competitors rush to commercialize emerging technologies and to satisfy customer needs. Despite the importance of this issue, conceptual models or systematic testing of specific drivers that could improve time performances in NPD are few and far between. There is, however, a lack of extensive empirical research into whether “interactions” between different drivers affect time performances. This article aims to investigate whether drivers can interact and can influence time performances with a “synergistic” effect. A survey was carried out in order to study the effects of two‐way driver interactions on “launch on time” and “launch against an accelerated schedule.” Three groups of drivers within the development‐process, organizational‐mechanisms, and strategic‐capabilities were considered. As this is an exploratory study, two‐way interactions between drivers of different groups were analyzed in order to detect which drivers had a synergistic effect on time performances. The study was based on a sample of 85 manufacturing firms producing mainly industrial goods. The NPD program within each company was considered, i.e., the new products developed and launched in the last three years. The statistical approach used is suitable for exploratory surveys. In the first phase, the G‐correlation test was used to verify the effects of single drivers in order to help interpret the results regarding two‐way driver interactions. In the second phase, regression models with two‐way driver interaction were performed with both linear and logistic regression in order to discover which significant models had a significant driver interaction. The resulting 13 models showed that interactions played an important role in determining time performances. The following are some of the most interesting results, as they have managerial implications. The NP Strategic Guide (clear definition and communication of new product goals) interacts with and enhances the influence of other drivers, such as predevelopment tasks, project manager use, and supplier and customer involvement. Technological and up‐front staff capabilities create important interactions with product definition and with customer involvement, which avoids development delays. Furthermore, the authors of this study discovered that the adoption of an overlapping approach without a high level of interfunctional team use may not be time efficient. Thus, if a firm has to work to a tight development schedule, it should seek and should integrate any possible synergistic effects between team use and overlapping development phases. The insights into interactions provide useful information that can be used when setting priorities and can help to attain higher performances by adopting a combination of selected drivers. In particular, the best practices, which many studies have highlighted, do influence time performances that depend mainly on the so‐called strategic‐capabilities drivers. These latter variables, unlike practices and activities, require a complex learning process. The path toward improvements within the development‐process requires both long periods of time and an integrated view of the process; hence, improvements cannot be achieved by simply applying common practices. Therefore, analysis of interactions within the NPD field looks promising and requires further study.     

New Product Preannouncement as a Signaling Strategy: An Audience‐Specific Review and Analysis*

Firms in various industries with highly competitive environments use new product preannouncement (NPP) as one of the most effective and popular signaling tools. Preannouncements can bring both benefits and costs to firms. Extant research has studied NPP from different perspectives and tackled the questions, “Should a new product be preannounced and when?” and “What information should be preannounced and why?” However, the benefits and costs of preannouncements from an audience‐specific perspective are less well understood. It is important to notice that benefits and costs of a preannouncement vary among different audiences and firms need to apply group‐specific weights in assessing the overall benefits and costs prior to making new product preannouncements. The purpose of this article is to review the existing literature on new product preannouncements for commonly observed marketing problems and to develop a general approach focusing on the target audiences and the incentives in sending signals to each audience and the impacts of these signals. This paper first reviews the literature on marketing‐related NPP issues as well as the determinants and effects of various factors on NPP decisions. Then, it discusses the phenomenon of new product preannouncements linked to other marketing and economics problems: (1) product development and positioning; (2) product diffusion and adoption; (3) firm value; (4) vaporware and antitrust litigations; and (5) consumer welfare. In addition, this paper divides the target audience of the new product preannouncement into four groups: customers, competitors, investors, and distributors. Based on current signaling theory, it proposes an audience‐specific framework to analyze the determinants, incentives, and impact of new product preannouncements. The proposed approach may provide more comprehensive insights on NPP strategies to managers and industrial decision makers. Finally, the paper suggests a number of future research directions from four different perspectives (i.e., customer, firm, government/industry, and methodology).     

A Product and Process Model of the Technology-Sourcing Decision

The technology‐sourcing decision traditionally has examined the choice either to innovate internally or to acquire technology from outside sources. The increasing complexity of this decision requires a move beyond the simple “make‐versus‐buy” dichotomy. We seek to test factors that influence the technology decision of subsidiaries for product and process technology across the continuum of options from internal development to outsourcing. We also explore concordance between the research streams of new product development and technology sourcing. Regression models are used to analyze data from 187 subsidiaries that suggest product and process technology development decisions sometimes are associated with similar factors and at other times they diverge. In particular, we find that external product and process technology acquisition decisions are associated negatively with differentiation goals and associated positively with product dynamism. While external product acquisition is associated negatively with a low cost goal and positively with increasing distance between primary marketing and R&D operations, external process technology acquisition is associated positively with high competitive intensity. Implications include the following: (1) While external product technology acquisition may provide quicker or even less expensive initial solutions, external reliance makes it difficult to maintain a long‐term positional advantage; (2) When greater distances separate key functional activities, external partners may provide solutions that are more responsive to local consumer needs, and the potential for improved communication may allow for quicker adaptation and increased flexibility; (3) In highly dynamic product situations, internal development, while providing greater control, can be expensive and can result in technologies that are not accepted by the marketplace; and (4) As competitive intensity increases, strategic imperatives may reduce the focus on product design and development and may require increasing concentration on manufacturing costs and efficiencies.     

Firm Characteristics and NPD Program Success: The Significant Influence of Global Discovery Management

Managing new product development (NPD) with a global point of view is argued to be essential in current business more than ever. Accordingly, many firms are trying to revitalize their NPD processes to make them more global. Therefore, examining global NPD management is one of the top priorities for research. While scholars have examined global launch management, there has been scant attention on the direct effect of global discovery management on NPD success. Therefore, this study investigates how a globally managed discovery phase enhances a firm's overall NPD success. Drawing upon the resource‐based view (RBV) and using Kotabe's ( 1990 ) generic model for market success in global competition as the overarching framework, this study examines four drivers of NPD success: global discovery management, the firm's “global footprint,” its inbound knowledge sourcing practices (i.e., “open innovation proclivity”), and nationality of the teams (i.e., “cross‐national global NPD team use”). The hypotheses are tested using a sample of 255 business units from multiple industries, headquartered worldwide, and surveyed during the 2012 PDMA Comparative Performance Assessment Study (CPAS). The PLM‐SEM analyses show that, of the four drivers examined, only global discovery management strongly influences a firm's NPD program success. The findings enhance our understanding of the particularities in global NPD. Based on the study's results, suggestions are provided as to how multinationals can leverage their international operations in the course of their front‐end activities.     

The Impact of Product Portfolio Strategy on Financial Performance: The Roles of Product Development and Market Entry Decisions

Innovation is one of the most important issues facing business today. The major difficulty in managing innovation is that managers must do so against a constantly shifting backdrop as technologies, competitors, and markets constantly evolve. Managers determine the product portfolio through key decisions about product development and market entry. Key strategic questions are what portfolio strategies provide the greatest reward. The purpose of this study is to understand the relative financial values of each component of a product portfolio. Specifically, the paper examines the short‐term and long‐term financial impacts of product development strategy and market entry strategy. These strategies reflect two critical tensions that must be balanced in product portfolio decision making and essentially determine a firm's product portfolio. In doing so, the paper also investigates how a firm's capabilities drive each component of a product portfolio. From the empirical analyses in the context of the biomedical device industry, the paper found important insights regarding product portfolio strategies. First, a large product portfolio helps a firm's financial performance. In particular, the pioneering new products have strongest impacts on short‐term performances, and nonpioneering mature products do not provide significant contribution. Second, the results indicate a persistent first‐mover advantage. The first‐to‐market new products yield not only an immediate effect, but also persistent long‐term effects, suggesting that it is important to be first in the market even though there may be short‐term losses. Third, the results suggest the need to balance between “mature” and “new” products. Also, firms need to balance “first‐to‐market” and “late‐entered” products. Because a new or pioneering product requires more resource, it may hurt other products in the portfolio. Thus, without support from mature or follower products, new products and pioneering products alone may not increase firm sales or profit. Fourth, from a long‐term perspective, the paper found that the financial market only rewards a firm's overall capability to deliver new products first in the marketplace. Thus, short‐term performance is mainly driven by product‐level innovativeness, whereas firm‐level innovativeness enhances forward‐looking long‐term performance. Fifth, the paper also found that pioneering new products are driven by integrating both primary and complementary technological capabilities. And nonpioneering new products are mainly driven by the capabilities in primary technology domain. These results provide important insight into the relative value and timing of return on investment in radical versus incremental innovation and alternative market entry strategies. By understanding the performance trade‐offs of these different factors in the short and long term, one can develop better guidelines for optimizing innovation strategies, and their dependence on both external and internal environmental conditions.     

The Formation of Tie Strength in a Strategic Alliance's First New Product Development Project: The Influence of Project and Partners' Characteristics

This paper draws on theories of interorganizational learning, social networks, and transaction cost economics to investigate the formation of tie strength between first‐time alliance partners. It focuses on a strategic alliance's first new product development (NPD) project, which is characterized by a lack of prior experience and insufficient trust between partners and explores how the interaction between (1) interorganizational learning (the “degree” [amount of knowledge shared] and “type” [tacit or explicit nature of the knowledge]); (2) the required communication (“frequency level” and “degree of media‐richness”) to transfer and exchange knowledge; and (3) economic transaction considerations (reducing cost and avoiding opportunism), in highly uncertain and dynamic environments, and, in the absence of an assumption of trust, will determine the future strength of the ties between partners. We argue that the “degree” and “type” of interorganizational learning that are required to efficiently develop an alliance's first NPD project determine the strength of the ties between the partners. Each “degree and type” of learning has a different impact on the frequency and media richness of the partners' communication, and consequently each leads to a different level of social tie strength between the partners. This relationship is moderated by the partners' market overlap. We suggest that the required “degree and type” of interorganizational learning is contingent on the project characteristics (degree of innovation; “radical versus incremental,” and the mode of development; “modular versus integrated”). This relationship, however, is moderated by the partners' technical skills (complementary versus similar).     

The Long Tail of the Auto Industry Life Cycle

This article explores how the industry life‐cycle theory, proposed by Abernathy and Utterback, can be reinterpreted from the viewpoint of product architecture dynamics. The “long tail” of the automobile industry life cycle, observed during the past several decades, is explained by an evolutionary framework in which a product's architecture is treated as an endogenous variable affected by customers' functional requirements, environmental‐technical constraints, and their changes. The present article explains how the existing industry life‐cycle model effectively explains the early history of automotive product‐process innovations, but that it fails to explain the “long tail” of the life cycle, and that an evolutionary approach of product architectures can be used to explain the architectural sequence and the long‐term trend of the increase in nonradical innovations. That is, the industry life‐cycle model certainly fits well with the actual pattern of product‐process innovations at the early phase of the automobile's development, between the 1880s (invention) through the 1920s (the end of the Model T) and into the 1960s, when product differentiation continued without significant product/process innovations (e.g., the Big Three's annual model change). But the question remains how this model can explain the rest of the industry's history (1970s to 2010s), which is characterized by “rapid incremental innovations,” or a “long tail of the life cycle,” with its upward trend of technological advancement rather than the end of innovations or the beginning of another industry life cycle (i.e., “dematurity”). The evolutionary framework of product architecture predicts that the macro architecture of a given product category (e.g., passenger cars) will be relatively integral when the functional requirements that customers expect, the constraints imposed by society and the government, and the physical‐technical limits inherent in the product are strong, and that it will be relatively modular when they are weaker. The dynamic architectural analysis starts from the Lancaster‐type analysis of a set of function‐price frontiers for a given product category (e.g., cars). Based on the design theories, it hypothesizes that the shape of function‐price frontiers are different between integral models and modular models. It then hypothesizes that price‐oriented customers tend to choose relatively modular products, whereas function‐oriented customers choose relatively integral products more often than not, other things being equal. Thus, the macro architecture of a given product can be determined depending on whether each architecture's price‐function frontier touches the price‐function preference curves of its customers. As for the future architecture of the car, its macro architecture, determined by markets and environments, will remain relatively integral and complex as long as it continues to be a fast‐moving heavy artifact in the public space, whereas its micro architecture, determined by engineers, will be somewhat mixed, as the engineers try to simplify and modularize the automobile design wherever the market and technology permit. The evolutionary framework of architectures also predicts that the architectural sequence inside the industry life cycle will differ by products (e.g., cars and computers) depending upon the dynamic patterns of technological advancement (e.g., shifts of the price‐function frontier) and market‐societal constraints (e.g., shifts of the price‐function preference curve).     

Behavioral Reasons for New Product Failure: Does Overconfidence Induce Overforecasts?

Efforts to organize and integrate research findings on new product performance determinants have lagged since the last significant overview paper appeared over a decade ago. Importantly, this literature has not considered entire categories of factors that are known to affect managerial decisions and behavior, namely those that pertain to decision‐makers' cognitive limitations and incentive structures. This research empirically investigates one specific cognitive distortion heretofore neglected in studies of new product commercialization—overconfidence, commonly defined in the literature as excessive belief in one's own abilities to generate superior performance. To lay the groundwork for subsequent exploration, the paper first introduces a behavioral model that both organizes well‐understood new product performance determinants and illuminates others heretofore not studied, namely incentive alignment and cognitive limitations and biases. The model summarizes extant research and allows development of research hypotheses related to overconfidence. The hypotheses and empirical investigation motivated by the model address two questions about the impact of overconfidence on new product commercialization activities. First, the study explores whether overconfidence is associated with overforecasting new product demand. Second, it evaluates two complementary mechanisms that may account for overconfidence‐induced overforecasts. The empirical findings are based on data generated in the course of management simulation workshops conducted among graduate students at three leading business schools in India. Three hundred thirty participants played individually four rounds of a computer‐based simulation game that involved decisions pertaining to new product development (including product formulation) and commercialization strategies. The decisions were captured and analyzed using statistical techniques. The results reveal that decision‐makers' overconfidence is associated with a higher likelihood of overforecasting new product sales. The observed effect is fully mediated by flawed tactical decisions that dampen demand, namely elevated product pricing. Sensitivity analyses show that these results are robust to a number of alternative explanations. However, the study finds no evidence implicating overconfident individuals as poor “innovators”—overconfident and nonoverconfident decision‐makers experienced comparable market demand for their new products. The paper concludes with a discussion of the results and provides specific recommendations for practice.